A profound inflection point?

[Tok3n]

Looks like property is still a one-way bet (to the upside)

http://www.stuff.co.nz/4514865a13.html

[miner]

Not sure if the guy down the road from me would agree with you Tok3n as his house that went on the market two years ago for just under a mill that dropped to 750k six months ago is still not sold,or the one the other day that after a year at 300k just dropped to 250k or the one at 530k now 500k after a year of sitting there or the four the other month that dropped between 20k-50k,I could go on but you get the idea ?,NO rush to buy at the moment as there's a ways to go yet.

The graph will be like a ramped share you know heads up steeper and faster as word of easy money spreads until there is a near vertical climb,then the music stops,people think hang on it's not worth this(smart money and rampers long gone by now) then it falters,starts to drop,up a tad as a few buy the cheap dip ?,then slowly down again,then it does what we used to call "fall off a cliff",bounce a bit then slowly (years) head back up.

Obviously we are talking about to different thing as most ramped shares die a nasty death were as property will recover in time,but when this all plays out the chart will look the same,property turned a year ago and has ways to go to the bottom of the cliff yet,the smart money is waiting patiently with NO emotion at the bottom for the scraps.

What people are doing now is chasing a dropping market,as in the guy that dropped from 300k to 250k has left it too late,he held out for the hyped mental price for too long then thought o sh*t better drop,but he left it too late and the market has dropped his 50k already.
So he has to chase again to sell but if he leaves it too long he will be behind the market again,and before he knows it a helpful person at the bottom off the cliff will offer him stuff all to pick him up which he may have no choice but to accept by then.

We are at the top of the cliff now.


Cheers
miner

[Dr_Who]

NO rush to buy at the moment as there's a ways to go yet.


We are at the top of the cliff now.


Cheers
miner

I agree with you.

Prefer to have money in the bank yielding high rates and playing the oilers/miners as a sideline hobby.

[Arbitrage]

Abitrage that would be absolutely stupid everybody would go mad and expect the reserve bank to bail them out every time they need to reinforce the message not to be an idiot by increasing them preferably two 0.5% rises 3 months apart starting now.

From an article today at:
http://www.stuff.co.nz/4516250a13.html

"Westpac chief economist Brendan O'Donovan called today's job figures "an absolute shocker".
He said the figures were "extraordinarily weak".
"It dramatically pulls forward the prospects of an interest rate cut, the market pricing will go towards pricing in a cut for July," Mr O'Donovan said."

[POSSUM THE CAT]

Arbitrage Yes he just wants to get the same stupid borrowing cycle again and either increase the banks profit or bail it out of its funding problems. It Is just a repeat of the stupid cycle started by National in the 1990s screw wages down tempt them to borrow instead of demanding decent wages. Untill we get to low skilled earnings up to a stage where they can do some spending businesses are going to do it hard but untill the low end can spend we are going to get nowhere business is a Pyramid and the low skilled the base of most spending not the high income earners like a lot of highly educated people are trying to tell us. Add for a checkout chick in Australia 3 years ago $18.29 per hour this equates to $40000.00 per year and these same people are thinking the Junior doctors are holding everyone to ransome by wanting a $2 per hour increase to Roughly $24 per hour Lowering interest rates is no going to help we have to get rid of the high debt cycle and some are going to get badly burnt doing it but housing has to drop 30 to 40%. Businesses will go to the wall to because they have made stupid decisions on the strenght of low interest rates. American housing is droping fast because it became unaffordable on wages being paid and so it will here Banks are due for some big write offs
Went to a westpac bank mortgagee sale QV$430000.00 Highest bid $332000.00 and the land agent the owners had no equity in house.

[Arbitrage]

. Businesses will go to the wall to because they have made stupid decisions on the strenght of low interest rates..

Small businesses are the major employer in this country. Many borrow money against equity in residential property. These are not necessarily stupid decisions. We live in a capitalist country and capital helps drive the economy. Decision making is based partly on the rules that governments set. So when interest rates go up then these decisions must change. You can see the results of this in business confidence surveys being bandied around at the moment.

We have to remember that our economy is a small cork floating in a big world economic ocean. It reacts quicker than many other larger economies (look at the housing sales for example). As a small business owner in Auckland, I can (and have said in the recent past) see that the economy is turning down faster than predicted based on retrospective statistics collected in Wellington. The reserve bank analysts should come and listen to the city fringe small business zone here and they would see instantly how the economy is performing. As interest rates directly affect this group, it is time to reduce them by 0.25 - 0.5 points.

[POSSUM THE CAT]

Arbitrage You still want the govt. to bail you out. Get yourself out of the mess you got yourself into the mess.

[Arbitrage]

PTC, don't worry about me mate. I operate totally independently of the govt. What I am worried about is potentially poor decision making by the Reserve Bank taking the country down, when through a bit of closer analysis they could lightly touch the accelerator to prevent the economy over shooting in a downward direction. They have done it before under Don Brash and can do it again.

[POSSUM THE CAT]

Arbitrage if it was done before it was stupid (and maybee I was out of the country when it was) and the sooner they drum the message into thick heads that they have to think about evetualities the better by increasing interest rates at least 0.5% preferably 1% to get them thinking instead of whining. Also it would give New Zealanders more incentive to hold more of their wealth in $NZ

[Dr_Who]

They have done it before under Don Brash and can do it again.

We gotto stop blaming the govt and RB. Each NZer should start looking at one self and ask why are we borrowing so much and living the life of the Jones. Mate, if one is to load ones self on debt to live a good life, then one should be prepare to pay it back or feel the pain when the tide turns and it has turned.

I dont at one bit feel sorry for those that got greedy in the property boom. During the crash times is a measure of a good investor. Those that survive through it or not will come out a better person and learnt from the mistakes.

I get sick of people living in a well to do area and driving a nice European car at the same time blowing hot air, going on and on about their overseas shopping spree. while I live a modest lifestyle and drive a jap car. We all know those that show off have very little liquid cash in their bank accounts and loaded up on debt. What they have is all show and BS.